Helsinki, March 22 : Finland will lower its corporate tax by about one-fifth next year in an effort to attract more investments, according to the budget draft.

In 2014, the corporate tax rate will be expected to fall to 20 percent from the current level of 24.5 percent, which is slightly higher than the EU average of 22.4 percent, reported Xinhua. The budget draft was announced Thursday.

The reduction was aimed at keeping the Finnish companies' headquarters in Finland, and hopefully attract more direct foreign investments, said the Finnish Broadcasting Company YLE.

However, cutting down the corporate tax could reduce state revenue by some 900 million euros (about $1.16 billion) annually.

The overall tax package was welcomed by the Federation of Finnish Enterprises soon after it was published.

Timo Lindholm, deputy chair of the federation, said the tax cut would benefit small and medium-sized enterprises.

At the same time, the Finnish government has also decided to raise the consumption taxes on tobacco, alcohol, sweets and beverage.

The consumption tax on electricity will also rise, which could probably encourage more efficient use of energy and reduce the need for further generation capacity.

In the long run, the Finnish government plans to cut 600 million additional euros in budget over the next three years.(IANS)